MARKET TREND FOR THURSDAY, MARCH 23, 2017
In line with global weakness, the Indian Equities markets
also suffered a setback and ended the day with loss of 91.05 points or 1%.
Technically speaking, this is a classical “throwback” that the Markets had after
it had a gap formed on the upside post US Election results. This gap got filled
in yesterday’s session and also a classical throwback occurred where the prices
returns near to the levels from which it broke out as marked by a red circle.
Today, on Thursday, we are all likely to see a modestly strong opening and a
reversal happening again. NIFTY is likely to open positive and witness a
breather from the weakness that it saw in the previous session. The levels of
9000-9010 will remain important pattern support to watch for.
The levels of 9075 and 9130 will act as immediate resistance
levels for the day. The supports will come in at 9000 and 8970 levels.
The Relative Strength Index on the Daily Chart is 59.5264
and it just crossed below from a topping formation. RSI has set a fresh
14-period low which is bearish. RSI has also set a fresh 14-period low while
the NIFTY has not and this has resulted into bearish divergence.
The Daily MACD
too has reported a negative crossover and it is now bearish trading below its
signal line. On the Candles, a falling window occurred. This usually has
bearish implications going ahead but it also requires a confirmation on the
following day which we fill NIFTY shall survive while taking support in the
8970-9030 zones.
The NIFTY March futures has gone on to add yet another over
3.23 lakh shares or 1.25% in
Open Interest and this shows continued addition of
fresh shorts in the system.
The pattern analysis shows a classical throwback. A
throwback occurs when the prices returns nears the same levels from which it
broke out on the upside. This is quite normal if the breakout is very sharp and
causes the price to be overbought which happened with NIFTY. Normally, this
causes the prices to consolidate before moving up again.
All and all, there are few observations that suggest that
the yesterday’s downside was nothing more than just a technical corrective
throwback. First, this came with addition in Open Interest, further, the global
markets are likely to trade relatively stable. The US 10-YR yield has come off
its highs rapidly over previous two days which is likely to minimize the
potential damage it could have caused. We very strongly recommend refraining
from shorting the Markets. Liquidity should be preserved and
Milan Vaishnav, CMT
Technical Analyst
(Research Analyst, SEBI Reg. No. INH000003341)
Member:
Market Technicians Association, (MTA), USA
Canadian Society of Technical Analysts, (CSTA), CANADA
+91-98250-16331
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